In West Michigan, the manufacturing sector continues to remain strong. And not just with traditional manufacturing companies associated with the automotive industry. Niche industrial companies like AEC Systems (producer of industrial washers) are doing especially well. Indeed, many local factories cannot find enough trained, qualified workers. As a result, companies are increasingly training their current workers in-house. So, while the unemployment rate is still rather high, isn’t this cause to celebrate?
Actually, manufacturing itself is starting to be seen by some as a liability. That is, its being seen by some as holding down the state’s per capita income growth. Put another way, manufacturing is no longer perceived as a viable long-term growth strategy for the region. Yes, the manufacturing sector is good at employing people. But its not adding wealth at the same rate as knowledge-based industries.
As that trend continues, the state will lose interest in upholding manufacturing as vitally important. With regard to the state’s overall economic health, manufacturing now accounts for less than 12% of the state’s per capita income. And non-management factory jobs account for just over 1 out of 9 jobs in the state.
In contrast, knowledge-based industries (think the Van Andel Research Institute) are gradually getting more publicity and attention. Not incidentally, they’re increasingly important to growing the state’s coffers. And they have a tremendous multiplier effect on the economy. For those who aren’t familiar with the term, the multiplier effect “reflects the full impact of a single job as measured by its associated additional economic activity”. Thus, one high tech job is responsible for indirectly creating as many as 4 other jobs.
Accordingly, regional economic planners should be proactive in facilitating the transition to knowledge-based industries. Remaining wedded to the belief that factory jobs are a long-term answer to the state’s economy is short-sighted. Creating wealth needs to be as important as creating jobs for the state’s economy to have both. And that’s especially true in West Michigan.
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